T-Mobile US Reports Largest Customer Growth in Four Years

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SAN FRANCISCO -- T-Mobile US, the fourth-largest American carrier, lost thousands of customers over the last few years to rivals that offered more popular phones. But it appears to be rebounding.

The company on Thursday said it had gained 1.1 million customers, including 685,000 contract subscribers, in the last quarter. That compares with a loss of 557,000 contract subscribers, the most valuable type of customer, in the same period a year ago. The upswing was its largest customer growth in four years.

The company, based in Bellevue, Wash., started offering the iPhone in April, when it also began offering new phone plans that addressed common frustrations with wireless companies, like confusing contracts and expensive data plans.

"By fixing the things that drive them mad, like contracts and upgrades, and freeing them from the two-year sentences imposed on them by our competitors, they are choosing the new T-Mobile in unprecedented numbers," John Legere, chief executive of T-Mobile US, said of his customers in a news release.

Over the last several years, T-Mobile lost many customers largely because it lacked the iPhone and they were unhappy with its service. But this year has been full of change at the company: it finally landed a deal with Apple to sell the iPhone, it began an overhaul of its network and it started offering lower-cost plans to lure customers from competitors. The company also added extra muscle in its merger with the smaller carrier MetroPCS, which was completed in May.

The change is costing T-Mobile. The company posted a loss of $16 million for the quarter, compared with a profit of $207 million in the same period a year ago. But it also reported revenue of $6.23 billion, up from $4.9 billion last year.

(A majority of the company is still owned by Deutsche Telekom, the German carrier. This quarter was the first time T-Mobile US reported earnings as a separate company after its merger with MetroPCS.)

The net income was above the expectations of Wall Street analysts. They had expected revenue of $6.01 billion, according to a survey by Thomson Reuters.

In March, T-Mobile discontinued traditional two-year contracts, allowing customers to buy a smartphone for a lower upfront cost and adding the cost of the device to their monthly bill over two years. It also continued to offer plans with unlimited data, an option that the top two carriers, Verizon Wireless and AT&T, killed years ago.

In general, T-Mobile's plans are also cheaper than its competitors' -- for $70 a month, a customer can have unlimited minutes, text messages and data. The plans offered by AT&T and Verizon cost about $100 a month or more.

T-Mobile expects the growth to continue. For the full year, it said it expected to add 1 million to 1.2 million contract subscribers.

In its effort to lure customers from competitors, the company has been working on its wireless network. It is far behind Verizon and AT&T in rolling out a faster fourth-generation network, called LTE. T-Mobile has LTE deployed in about 120 metropolitan areas, while Verizon has LTE in about 500 cities and AT&T has LTE in about 360 markets. The company will continue to expand the network throughout next year, according to Neville Ray, T-Mobile's chief technology officer.